Global Stocks Pause After Last Week's Rally

By Avantika Chilkoti

Global stocks traded slightly lower Monday as investors took stock of last week's rally, following progress in U.S.-China trade talks and strong U.S. employment figures.

In Europe, the Stoxx Europe 600 was down 0.3% in morning trading. Futures pointed to small opening declines on Wall Street of 0.2% for the Dow Jones Industrial Average the S&P 500.

In Asia, the Shanghai Stock Exchange was down 0.1%, Hong Kong's Hang Seng Index gained 0.5% and Japan's Nikkei dipped 0.2%.

The buoyant mood that propelled markets at the beginning of 2019 has faded in recent weeks as many investors question how long the expansion in the U.S. economy can go on.

Still, global markets rallied last week as President Trump met Chinese officials in Washington, claiming progress in trade negotiations, while data Friday showed that U.S. job growth rebounded in March.

That rally could come under pressure as earnings season kicks off in earnest this week with several companies, including Apple, FedEx and Walgreens Boots Alliance, reducing profit forecasts for the first quarter of the year.

Emiel van den Heiligenberg, head of asset allocation at Legal & General Investment Management, sounded a note of optimism about global growth, pointing to signs of reflation in China, progress in U.S.-China trade negotiations and dovish comments from the Federal Reserve.

"People worry too much," he said, saying he now forecasts recession in the U.S. economy is as far out as 2021, whereas just five months ago he had expected that downturn in mid-2020.

Investors will be watching closely when the Fed publishes minutes of its March meeting Wednesday, providing further clues about the central bank's expectations for growth and inflation, amid many inflation and consumer sentiment reports also due this week.

The WSJ Dollar Index, which tracks the dollar against a basket of 16 currencies, was down 0.1% Monday.

The 10-year U.S. Treasury yield edged down to 2.501% from 2.503% Friday. Yields move inversely to prices.

Elsewhere in commodities, global benchmark Brent crude oil was down 0.4% at $70.65 a barrel.

Oil prices jumped this weekend as fighting broke out near Tripoli, the Libyan capital, sending the oil-rich nation to the brink of civil war. The U.S. military said it withdrew a small contingent of American forces from the country, citing worsening security.

In the U.K, investors were watching closely as Brussels was set to decide on an extension to the Brexit deadline, perhaps setting a date at the end of the year or even in 2020, while Prime Minister Theresa May sought to cooperate with the opposition Labor Party's Jeremy Corbyn.

Erik Nielsen, chief economist at UniCredit Bank in London, labeled the Brexit saga "miserable," warning of the risk that Mrs. May might throw in the towel if talks with the opposition party break down.

"The Conservative party will descend into one of the most divisive leadership contests ever seen in the U.K.," he said in a note.

The British pound was up 0.1% against the dollar and flat against the euro Monday. The FTSE 100 index, which is dominated by large international businesses, and the FTSE 250 both dropped 0.3%.

Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com

(END) Dow Jones Newswires

April 08, 2019 05:40 ET (09:40 GMT)

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